"I think the fact that I have struggled financially is what makes me so sympathetic," said Christine O'Donnell. / Courtesy of the Christine O'Donnell campaign

Written by

GINGER GIBSON

The News Journal

When U.S. Senate candidate Christine O'Donnell first launched a bid for Congress challenging longtime incumbent Joe Biden, she capitalized on grass-roots support by preaching fiscal and social conservatism.

She gained the endorsement of the state Republican party and appeared on cable networks like Fox News and CNN and as a guest on "Politically Incorrect" with Bill Maher. More recently, she has marketed herself as a member of the tea party, a populist movement expected to influence the 2010 mid-term elections.

But while she was courting voters, she amassed thousands of dollars in campaign debt, was confronted by the IRS about unpaid income taxes and sold her Wilmington home to a campaign staffer to avoid a sheriff's sale ordered to settle mortgage claims, a News Journal investigation shows.

O'Donnell, who entered national politics as an anti-pornography crusader, attributed her financial predicament to misunderstandings and errors.

"I think the fact that I have struggled financially is what makes me so sympathetic," O'Donnell said.

She called the IRS lien "puzzling" and chalked up the mortgage mess to a technical error by the bank.

She's working to settle the debts from her previous campaign, O'Donnell said, and has already raised $11,000 for her 2010 Senate campaign, now headed to a primary against Republican Rep. Mike Castle. She appeared to blame questions about back taxes and debts on her opponent.

"This type of malicious behavior from supporters of a desperate career politician is to be expected because he cannot defend his big spending, liberal voting record," O'Donnell said Friday when asked about past legal troubles. "Just because the lords of the backroom have an obnoxious sense of entitlement to promote one of their own, doesn't mean their gutter politics are in the best interests of the voters."

State Republican Chairman Tom Ross said the party is aware of the "considerable amount of debt" O'Donnell has amassed in the last two elections.

"As a party, we take individual responsibility and fiscal responsibility very, very seriously," Ross said. "Our hope is that Ms. O'Donnell will do the same."

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Debts long-ranging

O'Donnell owes the federal government $11,744.59 in taxes and penalties from the 2005 tax year, according to a lien filed by the IRS on March 2, 2010, with the New Castle County Recorder of Deeds.

According to the IRS Web site, liens are placed after a taxpayer has been notified of a debt and the person fails or refuses to pay within 10 days. Liens attach to all current and future property owned by the taxpayer, including vehicles.

O'Donnell said she is currently being audited by the IRS and contacted the agent responsible for her case when she received the lien.

"That's a mistake," she said. "The IRS agent handling my audit was even perplexed by that questionable lien notice because he's in the process of resolving my audit."

Her federal campaign committee reported $23,776 in debt, more than the $10,585 cash in her campaign account, according to her most recent filings with the Federal Elections Commission. The FEC has cited her eight times for failure to report her contributions between 2007 and 2009.

She owes outstanding payments to staffers, consultants and volunteers, according to a campaign finance filing from January.

"Many of the past campaign debts were from invoices that were not approved," she said. "We're in the process of processing the legitimate ones."

O'Donnell said she is raising money to pay off the 2008 campaign debt and informing donors some of the money she gets now will be used to settle past campaign claims.

"It's not unusual for candidates to have campaign debt," she said.

O'Donnell also said she is doing "odd jobs" to pay her living expenses.

In campaign finance reports, O'Donnell lists her occupation as "self-employed." Her previous campaign sites have described her work as freelance public relations.

Her legal woes date back to 1994, when her alma mater, Fairleigh Dickinson University, in Rutherford, N.J., sued her for $4,823 in unpaid expenses, according to New Jersey and California court documents. The university won a judgment in New Jersey for the entire amount. In 2000, the judgment was transferred to California, where O'Donnell lived at the time, as unpaid, according to court documents.

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O'Donnell said the dispute was over student loans.

California reported the debt as satisfied in 2003, but she was never conferred a degree by Fairleigh Dickinson because of non-payment.

"They were withholding the diploma until I paid the bill," O'Donnell said. "I finished the coursework."

New residence

On Jan. 12, 2010, O'Donnell changed her Delaware address in the voter registration, according to Elections Commissioner Elaine Manlove.

She shares her new residence, a three-bedroom, two-bath town home in Greenville Place, with David Hust, a campaign staffer who is originally from Houston, Texas. Hust promotes himself on his Web site as a Christian rock music singer.

Greenville Place lists the prices of a town house rental between $1,645 and $2,020 a month, depending on the number of bedrooms and square feet.

O'Donnell said she pays half of her rent with campaign donations because she also uses the town home as her Senate campaign headquarters.

"I'm splitting it, legally splitting it and paying part of it," she said. "This is our technical headquarters."

O'Donnell said she has separate, private quarters and that staffers, like Hust, live in the other portion of the home.

"I am renting from the campaign," she said. "I'm an unconventional candidate because I believe that we have to make sacrifices."

While the Federal Election Commission frowns on mixing campaign funds with living expenses, Judith Ingram, an FEC spokeswoman, said the commission will consider approving unusual rental arrangements.

House foreclosed

O'Donnell moved to Delaware from Washington, D.C., in 2003 to work for the conservative publisher Intercollegiate Studies Institute. In D.C., she was the founder of the Savior's Alliance for Lifting the Truth, which lobbied Congress on moral issues.

She began working for ISI in Hockessin on March 12, 2003, and was to be paid an annual salary of $65,000, according to court filings.

She purchased a home on Lincoln Street in Wilmington in August of 2003, taking out a mortgage with CitiBank for $98,500, according to New Castle County property records.

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O'Donnell was fired by ISI on Feb. 26, 2004, after she complained to the U.S. Equal Employment Opportunity Commission that she was the victim of gender discrimination, according to court filings. O'Donnell sued ISI in U.S. District Court in 2005, alleging she was fired in retaliation for complaining to the EEOC. In her suit, O'Donnell sought back pay, future pay and punitive damages.

ISI countered that O'Donnell was running a for-profit public-relations business while on the clock.

In January 2008, O'Donnell dropped the lawsuit against ISI, saying at the time she could no longer afford an attorney.

O'Donnell was also having trouble paying her mortgage, according to the lawsuit filed by the mortgage holder on March 5, 2008. The mortgage company secured a default judgment against O'Donnell for $90,421.31 on May 13, 2008.

A sheriff's sale date was set for Aug. 1, 2008, in the heat of O'Donnell's campaign against Biden, who was about to join Obama's presidential ticket.

But a month before the sheriff's auction, O'Donnell sold the house at 518 N. Lincoln Street for $135,000 to Brent Vasher, who was working as legal counsel for her Senate campaign.

O'Donnell said she sold it to Vasher, who was her boyfriend at the time, with the intention of buying it back.

"I had every intention of buying it back, eventually, even as of this fall I wanted to buy it back," she said. "I chose to run for office instead."

Vasher, an attorney at SEI Financial in Oaks, Pa., declined to comment for this article.

O'Donnell said she was not aware of the mortgage company lawsuit and that she never received a notice of foreclosure.

She said she used the money raised by selling the house to pay off a home equity loan.

"I sold the house to Brent," she said. "I got out of debt so I could financially run for office and that's why I chose not to buy it again this fall."

Continues to rent

O'Donnell continued to live in the Lincoln town house until the summer of 2009, paying rent to Vasher, she said.

Next-door neighbor Kathleen Benedetto, 51, said O'Donnell arrived at the house one day last summer and couldn't get in. Benedetto said the locks had been changed. Neither O'Donnell nor Vasher would confirm why O'Donnell moved out.

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"I told her she was a day late and a dollar short," Benedetto said.

Benedetto said it was miserable living next door to O'Donnell for five years. She said Vasher gutted the home, removing piles of trash after taking possession.

Wilmington city records detail several complaints about the upkeep of the house while O'Donnell lived there.

In September 2008, she was ticketed for high grass and weeds, according to city records. The ticket was appealed and later paid. The ticket was a result of a complaint that the high grass was providing a breeding ground for opossums, according to Wilmington spokesman John Rago.

O'Donnell said the ticket was issued in the middle of the campaign season while she was busy running for office.

Benedetto said the opossums were getting into her own backyard and that the high grass also coincided with a mice infestation in several row homes. She said her house cat killed about a dozen mice that summer.

O'Donnell blamed neighbors for feeding the opossums, but refused to say which neighbors.

During the summer of 2009, O'Donnell moved out of the Lincoln residence and in with a friend, O'Donnell said. Three months later, she moved to Greenville Place. She said she consulted an attorney about using campaign money to help pay the rent.

"If there is anything questionable, it is not our intent to break a law," O'Donnell said. "I do try to do what's right."